Verizon balks at higher outage reimbursements

ALBANY, N.Y. -- Verizon has lodged objections to a state Public Service Commission order to pay higher reimbursements rates to customers who have service outages lasting 72 hours or more for landline telephones.

The response was submitted last week to a Jan. 17 commission report that found a "disturbing deterioration" in Verizon repair service.

"We believe additional protections may ... be necessary to ensure that Verizon is providing timely (landline) repair service," said Chad Hume, commission director for the office of telecommunications.

Among problems commission staff found was that once Verizon was already required to reduce a customer's bill there was no reason for the utility to act quickly.

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Verizon lawyer Joseph Post in a Feb. 25 letter contended that statistics show there have been efforts to improve repair rates.

"This is not the pattern that one would expect if Verizon's practice were simply to shrug its shoulders at the end of 24 hours and to move all remaining (out-of-service) troubles to the back burner, to be dealt with at an indefinite future date," he said. "Rather, the data shows that Verizon makes continuing efforts to close out troubles even after the 24-hour period under the commission's guidelines has passed."

Under the change ordered in Verizon reimbursements, customer bills will be reduced by 10 percent of the monthly rate for each 24-hour period of service loss after the first 72 hours. The rate was previously 6.67 percent, which began after the first 24 hours of service loss.

Commission staff wrote that the new rate of penalty would allow customers to received a "full month's credit by the 12th day of the interruption."

Staff members in a report contend that Verizon has reduced its repair crews to its landline service, which is considered a monopoly, so the company could focus on other types of telephone service. They called it a "disturbing deterioration" that needed to be addressed through stronger penalties.

Post in the letter said commissioners had exceeded their authority to set penalties on the utilities.

"Although ... the (state) Public Service Law grants the commission power to require a regulated company to 'provide a refund or credit to a customer when a payment has been made in excess of the correct charge for actual service rendered to the customer,' nothing in the law expressly or by implication grants the Commission power to award consequential damages or any kind of refund, credit, or damage remedy in any other circumstances," he said.

Post also noted the penalty hurts Verizon at a time when the company has lost 30.7 percent of its business customers from 2007 to 2011. He said that Dun & Bradstreet reports the company's current market share is 55 percent of state customers and that Verizon "continues to lose additional lines consistently, month after month."

The change in reimbursements to customers comes in response to a request from the state Attorney General's Office asking that Verizon be forced to make better efforts at repairs.

"According to the attorney general, Verizon's poor service harms residential, business and local government customers because these customers are forced to wait an inordinate amount of time for service restoration," staff members wrote.

However, Post contended that use of business lines to determine repair rates is unfair because the Verizon service quality improvement plan penalties were developed to address customers with disabilities.